Jul 31, 2020 11:58 PM

China Business Digest: Regulators to Punish Luckin Coffee; Central Bank Delays New Asset Management Rules



Nasdaq-delisted Luckin Coffee faces penalties in China after investigations confirmed the coffee chain’s accounting fraud and unfair competitive practices. As widely expected, the central bank extended the transition period for sweeping new asset management rules for another year. Beijing is sending personnel to Hong Kong to help conduct large-scale Covid-19 testing after a recent upsurge in new cases.

By Lu Yutong (


China regulators to punish Luckin Coffee for financial fraud

Chinese regulators will impose penalties on Luckin Coffee Inc., after an official investigation confirmed that the coffee chain fabricated hundreds of millions of dollars in sales. The Ministry of Finance and the State Administration for Market Regulation didn’t specify the penalties.

Central bank delays new rules for $12.9 trillion WMP industry

China’s $12.9 trillion wealth management industry got a one-year year reprieve from new rules set to take effect in December, the central bank announced Friday. Considering the impact of the Covid-19 pandemic to the economy and the finance sector, the central bank extended the transition period for financial institutions to comply with sweeping new asset management rules till the end of 2021.

ByteDance considers listing China business in Hong Kong or Shanghai

ByteDance, the parent company of short video app TikTok, is considering listing its domestic business in Hong Kong or Shanghai rather than floating the entity as a whole outside the mainland amid rising tension between China and the U.S., Reuters reported. The tech giant was valued at $140 billion earlier this year.

China’s factory output picked up in July

China’s manufacturing purchasing manager’s index rose to 51.1 in July from 50.9 the previous month, data from the National Statistics Bureau showed on Friday. The nonmanufacturing gauge dropped slightly to 54.2, while the construction indicator rose back above 60, Bloomberg reported. Readings above 50 indicate improving conditions from the previous month.

China snaps up chips before Hong Kong route shuts

Chinese importers of computing chips are ramping up their purchases of equipment through Hong Kong. Re-exports of semiconductors through the special administrative region to the mainland jumped by 11% in the first half of the year from the same period in 2019, almost double the increase in total chip purchases.

Re-exports rose by 21% in June alone. Trade through Hong Kong represents more than 38% of China’s total chip imports on average.

Covid-19 vaccine front-runner CanSino eyes STAR Market listing

CanSino Biologics Inc., the manufacturer of one of China’s first potential Covid-19 vaccines, plans to raise 5.2 billion yuan ($742 million) in a secondary public offering on Shanghai’s Nasdaq-style STAR Market, with shares priced at 209.71 yuan each, the second-highest offering price on the new tech board.

The company has completed a phase-two trial, and phase-three tests are expected to start soon.

Wanda sells Chicago tower in further asset unwinding

Wanda Hotel Development Co. Ltd., a unit of Chinese billionaire Wang Jianlin’s business empire, agreed to sell its 90% stake in a Chicago property project for $270 million, clearing out its last remaining foreign real estate asset as part of a campaign to unwind debt.

The Hong Kong-listed subsidiary of Dalian Wanda Group Co. Ltd. will sell its stake in the Vista Tower project to Chicago-based real estate company Magellan Parcel. The sale is expected to generate a gain of about HK$94 million ($12.1 million), helping the company to deleverage, improve cash flow and reduce debt, it said.

Chinese manufacturers fall behind rivals in vaccine container production

Chinese glass manufacturer Chongqing Zhengchuan Pharmaceutical Packaging announced (link in Chinese) Wednesday that it plans to issue convertible bonds worth up to 405 million yuan to produce borosilicate glass bottles, a type of container which can be used to store vaccines. The company hasn’t yet produced any borosilicate glass bottles for sale, and its hometown rival Shandong Pharmaceutical Glass has annual production capacity of 200 million but hasn’t received any orders.

By contrast, German glass-manufacturer Schott AG announced on Thursday that it has capacity to produce 2 billion borosilicate glass bottles suitable for Covid-19 vaccines, and has reached supply agreements with pharmaceutical companies.

Uber halts plan to move Asian headquarter to Hong Kong

American ride-hailing company Uber Technologies announced on Thursday that it has suspended a plan to move its Asia headquarters to Hong Kong and will stay in Singapore until at least December 2022.

Uber attributed the delay to lack of government support. “We have seen strong public support for reform, but not the level of certainty from the government that we need,” it said.



• A Beijing Internet Court on Thursday ruled that Wechat Read, the e-book reader app developed by Tencent and Douyin, the Chinese version of short video app TikTok, misused users’ personal information without receiving their consent.

• L’Oreal SA may review how much money it spends on TikTok promotions depending on how privacy concerns regarding the app’s links to China play out, the French skin care giant’s chief said in a Bloomberg TV interview.

• Chinese online video service provider Baofeng Group Co. Ltd. President Feng Xin was charged (link in Chinese) by the Jing’an District People’s Procuratorate of Shanghai with bribing nonstate employees.

• The average residential land price in 100 major Chinese cities tracked by the E-house China R&D Institute rose by 10.2% year-on-year to 6,176 yuan per square meter of floor space in the first half, according to a report released Wednesday.

• China’s investment in power infrastructure rose 21.6% in the first half of the year to 340 billion yuan, partly due to ramped up spending on “new infrastructure” and renewables.

• The northeastern port city of Dalian has finished 3.89 million coronavirus swab tests as of Thursday after a small-scale outbreak stemming from a local seafood company, the city’s deputy health administrator said (link in Chinese). The city will continue to test the remainder of its residents.

• Sha Yan has been named (link in Chinese) the new president of the Shenzhen Stock Exchange, filling a position left vacant since mid-March, according to Friday announcement by the bourse. Sha previously worked at the China Securities Regulatory Commission for 20 years, and holds a bachelor’s degree in accounting and a PhD in business administration.

Zhao Zhengyong, former party chief of Northwest China’s Shaanxi province, was given a death sentence suspended for two years by Tianjin No. 1 Intermediate People’s Court on Friday, for taking bribes worth more than 717 million yuan over the course of his career.

• A “Peace Sutra” book with mantras repeating “be at peace” throughout has drawn mass attention and led to a probe into the writer, the second most senior police official in Northeast China’s Jilin province.



• The Chinese mainland added (link in Chinese) 127 new Covid-19 infections on Thursday, up from Wednesday’s 105 and marking the third consecutive day of triple-digit increases. Of Thursday’s new cases, 123 were locally transmitted, with 112 from the Xinjiang Uygur autonomous region and 11 in Northeast China’s Liaoning province.

The country reported one suspected case in Shanghai, which was imported, and no deaths for Thursday.

• On Thursday, Hong Kong reported 149 new coronavirus infections, taking the number of total cases to date to 3,152. Among them, 145 were local infections.

The State Council’s Hong Kong and Macau Affairs Office said that at the Hong Kong government’s request Beijing will send mainland personnel to the city to help conduct large-scale nucleic-acid testing (link in Chinese) and assist in the construction of temporary quarantine and treatment centers. Meanwhile, Hong Kong Chief Executive Carrie Lam said she would postpone (link in Chinese) coming legislative elections for a year, citing a recent upsurge in coronavirus cases.

• As of Friday afternoon Beijing time, the number of global coronavirus infections had surpassed 17.3 million, with a death toll over 673,000, according to data from Johns Hopkins University.

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Caixin’s coverage of the new coronavirus


Japanese convenience store operator Lawson will begin opening prefab outlets in China, meant to save money on construction and give rise to a more flexible expansion strategy. About 10 prefab stores are scheduled to open across the country before the year ends.


Aug. 3: Release of Caixin China manufacturing PMI

Aug. 5: Release of Caixin China services PMI

Aug. 6: SMIC reports second-quarter financial results

Aug. 7: Release of China’s import and export data for July


Contact reporter Lu Yutong ( and editor Yang Ge (

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China Business Digest: President Xi Urges Deeper Reforms in Response to Turbulence; Overseas Acquisitions by Chinese Companies Plunge

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